Authors – Zunaid M Lundell
Long-termism relates to a company’s corporate governance strategy and the manner in which the board incorporates considerations of all stakeholders of the company. Establishing long-termism as the normative framework of negotiations throughout the African continent would lead to tangible benefits for Africa and the growth of her economies.
GREATER RETURNS IN THE LONG TERM
A 2017 report by McKinsey & Company suggests that the adoption of long-term approaches to corporate governance, and by implication FDI flows to developing countries, “exhibit stronger financial performance over time” for companies that adopt a long-term approach to corporate governance.
Interestingly (or rather intuitively), long-term approaches have a greater macro-economic footprint on economies than short-term companies, generating jobs and becoming more impervious to negative geocentric economic activity. For example, McKinsey & Company noted that long-term companies reported revenues which “declined less during the financial crisis and grew more rapidly after the crisis; the revenue of long-term companies grew at an average annualized rate of 6.2 percent from 2009 to 2014, compared with 5.5 percent for other firms.”
What can be gleaned from these findings is that long-term approaches to corporate governance – where African employees are treated with dignity and respect, where the environment is maintained and nurtured and where communities are supported – will lead to greater returns in the long-term with less civil unrest and operational disruptions.
Mckinsey & Company, upon considering their findings, aptly remarks that:
“Long-term companies delivered higher levels of economic profit over the sample period, generating 81 percent higher annual economic profit in absolute terms by 2014, on average. This finding indicates that the higher revenue and earnings exhibited by long-term firms is no fluke—these companies delivered more value than other companies. Perhaps more important, this value did not materialize overnight. Although long-term firms had higher average economic profit over the whole sample, the gap widened over time as long-term plans came to fruition.”
WHY DEVELOPING COUNTRIES WILL BENEFIT
African governments and corporate lawyers and negotiation teams from developing countries will benefit from leveraging long-termism narratives. As an indication of this, Mckinsey & Company found that long-term companies comprised a significant portion of corporate growth and even delivered greater-than-expected returns to their respective shareholders. 
Africa has many young, emerging democracies, some with relatively attractive investment ecosystems. Negotiation teams and their lawyers should begin to impose certain requirements on multinational companies looking to establish business interests in Africa, particularly the requirement that such companies act as “good corporate citizens” and adopt a long-term approach – after all, studies indicate that they will also reap the benefits in the long-term.
Negotiation teams must also begin to incorporate terms and provisions which ensure boards of companies adopt an approach that renounces the TSR theory in favour of multi-stakeholder engagement that is concerned with long-term value creation for the company, its shareholders, creditors, suppliers, employees, trade unions, surrounding communities and the environment in which it operates.
A long-term approach will potentially result in outcomes where (i) attention to board succession planning and genuine African economic empowerment strategies and policies are implemented; (ii) the understanding of a board’s performance to be solely related to quarterly profits is demystified; (iii) sustainable environmental policies and action plans are developed and implemented (iv) greater resource allocation is dedicated to innovation and R&D; and (v) boards take integrated and sustainable approaches to the use of company capital and resources.
 D Barton et al. McKinsey Global Institute, Measuring the Economic Impact of Short-Termism, Discussion Paper, February 2017, p. 2.
 D Barton et al. McKinsey Global Institute, as per fn. 21, p 4.
 Id, p. 4.
 Id, p. 5.
 D Barton et al. McKinsey Global Institute, as per fn. 21, p. 7.